Demand for pet products in the United States has cooled, and leading brands have adjusted their growth strategies

According to the latest report from eMarketer, there was a pet adoption boom in the United States before the epidemic, which drove the growth of pet products. However, under the continued influence of high inflation, the driving effect brought by the epidemic is disappearing, and the change in consumer demand has prompted leading brands to adjust their strategies.

In the United States, Chewy and Petco are the largest brands in the pet supplies sector, and both brands achieved sales growth that exceeded expectations in the fourth quarter.

Data showed that Chewy's fourth-quarter sales grew 13.4% to $2.71 billion, exceeding expectations of $2.64 billion.

Petco's fiscal fourth-quarter sales increased 4.2% year-over-year to $1.58 billion, slightly above the consensus estimate of $1.57 billion.

Although both achieved growth that exceeded expectations, signs of consumer demand suggest that pet product sales may cool in the future.

Economic uncertainty increases, demand for pet products cools

eMarketer expects pet product sales to grow 7.1% year-over-year in 2023, up from 6.1% last year. However, much of that growth is due to rising prices rather than volume, with pet food prices up 15.2% year-over-year in February, according to the U.S. Department of Labor.

Amid an uncertain economic environment, Petco expects its net sales for fiscal 2023 to be between $6.15 billion and $6.28 billion, well below the $6.36 billion guidance expected by Wall Street analysts.

Chewy's fiscal 2023 net sales guidance of $11.1 billion to $11.3 billion (which would be growth of 9.9% to 11.9%) was in line with analysts' expectations of $11.11 billion. However, the brand's active customer count fell to 20.41 million from 20.66 million a year ago, which is a warning sign.

As consumers become more cost-conscious, retailers are seeing growth opportunities for their own brands of pet products. For example, Petco has seen significant growth in its Wholehearted private label, and Dollar General launched its rebranded Nature's Menu private label line of dog and cat food earlier this month.

E-commerce channel sales are strong, and brand growth strategies are adjusted

According to research, the purchase of pet products in the United States is shifting online. It is expected that by 2025, e-commerce sales will account for 45.7% of all pet product sales in the United States, compared with only 31.0% in 2020.

Chewy has long offered subscription plans to increase customer repurchases. Data shows that in the fourth quarter of last year, Chewy vending machine sales soared 17.5%, and subscription sales accounted for 73.3% of overall sales, up from 70.7% in the same period last year.

Petco is also seeking to stimulate growth through subscriptions, and recently announced an exclusive partnership with Freshpet to provide fresh pet food subscription services to gain a share of the fast-growing fresh frozen pet food category.

Petco said the category will reach $6 billion in the next four years, and the brand will also provide veterinary care and grooming services to find new sources of revenue. These products and services are basic needs of pet owners.

As inflation continues to weigh on retailers like Petco and Chewy, they will focus more on meeting consumers' basic needs to avoid losing market share.

Editor✎ Ashley/

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